In the property and casualty industry, personal lines insurance (such as auto or homeowners’ insurance) is an essentially static product. The customer buys a policy from an insurer and, for all intents and purposes, that defines the relationship. During the life of the policy, there is little reason for either insurer or customer to interact and engage with each other, except for routine exchanges of information, such as changes of address or marital status, or basic transactions such as renewals and billing.
There are, of course, exceptions. Policyholders must notify their insurers when they buy or sell a home or a car, or when new drivers are added to the household. And then there are claims, a “make or break” moment for insurers when customers find out whether the insurer delivers on the promise implied in owning a policy.
The episodic nature of the customer relationship – long periods of inactivity with occasional flashes of intense involvement – makes it difficult for property and casualty insurers to cultivate customer loyalty. As Accenture research has shown, while the mere act of filing a claim makes customers more likely to switch carriers, an unsatisfactory claims experience vastly increases the likelihood that the customer will switch.
Recognizing that expanding customer relationships is much less expensive than finding new customers, P&C insurers are experimenting with new ways to engage with customers. One approach is to offer new products and services tailored to specific client needs. These products may be insurance-based – for example, an offer to “bundle” home and auto insurance policies at a lower combined rate – but, increasingly, they are not related to insurance. One prominent P&C insurer’s website, for example, features checking accounts, credit cards, and a car-buying service.
These offerings serve two valuable purposes. First, they generate immediate revenues as customers sign up for “white label” products such as credit cards. Second, they increase customer engagement, giving the insurer more contact points with the customer.
In future posts, we will explore some of these offerings in more detail and discuss how they help change the rules of customer engagement.